India's Services Sector Shows Strong Growth in February: HSBC
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Synopsis
India's services sector showed significant growth in February, with the activity index rising to 59 from 56.5, according to HSBC PMI survey data. Job creation surged, reflecting strong demand and positive business sentiment.
Key Takeaways
- India's services sector activity index increased to 59.
- Job creation surged at one of the fastest rates since 2005.
- Global demand contributed significantly to output growth.
- Service providers reported better demand from diverse regions.
- Business sentiment remains broadly positive for the future.
New Delhi, March 5 (NationPress) India's services sector demonstrated strong growth in February, with the activity index climbing to 59 from 56.5 the previous month, as reported by the HSBC PMI survey released on Wednesday.
The accelerated growth rate also resulted in job creation increasing at one of the fastest levels since 2005.
According to the survey, “To manage the influx of new businesses and ease capacity constraints, Indian services companies continued to implement recruitment initiatives. Employment surged sharply, marking one of the highest rates recorded since data collection began in December 2005.”
“The rise in global demand, the highest in six months according to the new export business index, significantly contributed to the output growth in India’s services sector,” stated Pranjul Bhandari, chief India economist at HSBC.
Support for this trend came from increased international orders, with service providers noting enhanced demand from clients across Africa, Asia, Europe, the Americas, and the Middle East. Overall, external sales surged at the quickest rate in six months, as noted in the survey.
Despite robust demand suggesting pricing power for service sector firms, consumer services experienced the most impact from rising prices.
“Among the four primary segments of the service economy tracked by the PMI survey, cost pressures were most pronounced in the Consumer Services sector. The most significant hike in selling charges was observed among Transport, Information & Communication firms,” the survey indicated.
This survey aligns with the official GDP data released last week, which indicated that the services sector's performance spearheaded the recovery in economic activity during the third quarter, with growth rebounding to 6.2% from 5.6% in the second quarter.
The HSBC India Composite Output Index also increased from 57.7 to 58.8 during the same period, reflecting a considerable expansion rate.
“Job creation and inflation in charges remained robust throughout February. Looking forward, the business outlook remains predominantly positive,” Bhandari added.
Factors such as advertising, improved customer relations, efficiency enhancements, and favorable demand conditions supported optimistic forecasts for output in the upcoming year. Approximately one-quarter of survey participants anticipate growth in the next year, while less than 2% expressed pessimism.
